<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
(Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 1999
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to _________
Commission file number 1-10615
EMISPHERE TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3306985
-------- (I.R.S. Employer
(State or jurisdiction of Identification Number)
incorporation or organization)
765 Old Saw Mill River Road 10591
Tarrytown, New York -------
(Zip Code)
-------------------
(Address of principal executive offices)
(914) 347-2220
--------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be files by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
Registrant was required to file such reports) and (2) has been subject to
such filing requirements for at least the past 90 days. Yes X No ___
---
APPLICABLE ONLY TO CORPORATE ISSUERS
The number of shares of the Registrant's common stock, $.01 par value,
outstanding as of November 30, 1999 was 14,489,284.
Page 1 of 14
Exhibit Index on Page 12
<PAGE>
EMISPHERE TECHNOLOGIES, INC.
Index
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed Balance Sheets as of October 31, 1999
and July 31, 1999 and Pro-forma Balance Sheet
as of October 31, 1999 3
Condensed Statements of Operations for the three
months ended October 31, 1999 and 1998 4
Condensed Statements of Cash Flows for the three
months ended October 31, 1999 and 1998 5
Notes to Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
</TABLE>
All other schedules and compliance information called for by the instructions to
Form 10-Q have been omitted because the required information is not applicable
or not present in amounts sufficient to require submission.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements under the captions "Management's Discussion and Analysis
of Financial Conditions and Results of Operations" (Item 2) and the notes to the
Company's unaudited financial statements (Item 1) as well as certain oral
statement made from time to time by representatives of the Company constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. These forward looking statements include (without
limitation) statements regarding: planned or expected studies and trials of oral
formulations that utilize the Company's technology; the timing of the
development and commercialization of the Company's products; potential products
that may be developed using the Company's technology; the potential market size,
advantages or therapeutic uses of the Company's liquid oral heparin formulation
or any other product; and the sufficiency of the
2
<PAGE>
Company's available capital resources to meet its funding needs. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the Company's actual results, performance or
achievements to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. These
factors include, among others, the following: the success of the Company's oral
heparin product and the Company's ability to find a marketing partner to help
the Company commercialize it; the viability of the Company's product candidates,
most of which, other than liquid oral heparin, are in the early stages of
development; the need to obtain regulatory approval for the Company's liquid
oral heparin and other product candidates; the Company's dependence on
collaborative partners to develop and commercialize products and the Company's
ability to fund such efforts with or without partners; the Company's absence of
profitable operations and need for additional capital; the Company's dependence
on patents and proprietary rights; and other factors described in this Report
and the Company's other SEC filings.
3
<PAGE>
Item 1. Financial Statements
EMISPHERE TECHNOLOGIES, INC.
CONDENSED BALANCE SHEETS
October 31, 1999 and July 31, 1999
and Pro forma as of October 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
Pro forma
October 31, October 31, July 31,
1999 1999 (Note6) 1999
----------------------------------------------
<S> <C> <C> <C>
Assets:
Current assets:
Cash and cash equivalents $ 418,089 $ 23,918,089 $ 11,461,126
Marketable securities 5,487,005 5,487,005 6,343,515
Prepaid expenses and other current assets 777,814 777,814 694,366
------------ ------------ ------------
Total current assets 6,682,908 30,182,908 18,499,007
Equipment and leasehold improvements, at cost, net of accumulated
depreciation and amortization 11,182,837 11,182,837 11,500,767
Purchased technology, net of accumulated amortization 8,254,710 8,254,710 8,395,415
Other assets 60,164 60,164 81,179
------------ ------------ ------------
Total assets $ 26,180,619 $ 49,680,619 $ 38,476,368
============ ============ ============
Liabilities and Stockholders' Equity:
Current liabilities:
Accounts payable and accrued expenses $ 1,492,663 $ 1,492,663 $ 2,491,347
Senior convertible notes, current portion 2,647,603
------------ ------------ ------------
Total current liabilities 1,492,663 1,492,663 5,138,950
Note payable 21,000,000 21,000,000 20,000,000
Deferred lease liability 2,087,662 2,087,662 2,050,042
------------ ------------ ------------
Total liabilities 24,580,325 24,580,325 27,188,992
------------ ------------ ------------
Stockholders' equity:
Preferred stock, $.01 par value; authorized 1,000,000 shares;
none issued and outstanding
Common stock, $.01 par value; authorized 40,000,000
shares; issued 12,206,511 shares (12,163,011
outstanding) on October 31, 1999, issued
14,506,511 shares (14,463,011 outstanding) pro
forma October 31, 1999 and issued 12,181,468
shares (12,137,968 outstanding) on July 31, 1999 122,065 145,065 121,815
Additional paid-in capital 99,363,783 122,840,783 99,161,980
Accumulated deficit (97,687,572) (97,687,572) (87,804,852)
Accumulated other comprehensive (loss) income (5,169) (5,169) 1,246
------------ ------------ ------------
1,793,107 25,293,107 11,480,189
Less, common stock held in treasury, at cost; 43,500 shares (192,813) (192,813) (192,813)
------------ ------------ ------------
Total stockholders' equity 1,600,294 25,100,294 11,287,376
------------ ------------ ------------
Total liabilities and stockholders' equity $ 26,180,619 $ 49,680,619 $ 38,476,368
============ ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements
4
<PAGE>
EMISPHERE TECHNOLOGIES, INC.
CONDENSED STATEMENTS OF OPERATIONS
For the three months ended October 31, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
----------------------------------------
<S> <C> <C>
Contract research revenues $ 625,000 $ 3,579,061
----------- -----------
Costs and expenses:
Research and development 8,147,985 3,938,287
General and administrative expenses 1,258,412 1,360,193
Depreciation and amortization 596,578 361,066
Loss in Ebbisham Ltd. 1,160,768
----------- -----------
10,002,975 6,820,314
----------- -----------
Operating loss (9,377,975) (3,241,253)
----------- -----------
Other income and expense:
Other income 274,158 497,157
Interest expense (778,903) (236,250)
----------- -----------
(504,745) 260,907
----------- -----------
Net loss $(9,882,720) $(2,980,346)
=========== ===========
Net loss per share, basic and diluted $ (0.81) $ (0.27)
=========== ===========
Weighted average shares outstanding, basic and diluted 12,147,000 11,005,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements
5
<PAGE>
EMISPHERE TECHNOLOGIES, INC.
CONDENSED STATEMENTS OF CASH FLOWS
For the three months ended October 31, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
----------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (9,882,720) $(2,980,346)
------------ -----------
Adjustments to reconcile net loss to net cash
used in operating activities:
Non-cash interest expense 707,836
Depreciation and amortization 455,873 361,066
Amortization of purchased technology 140,705
Increase in deferred lease liability 37,620 1,226,433
Amortization of deferred financing cost 21,015 67,500
Amortization of discount on marketable securities 94 20,773
Loss in Ebbisham Ltd. 1,160,768
Changes in assets and liabilities (789,968) (1,669,159)
------------ -----------
Total adjustments 573,175 1,167,381
------------ -----------
Net cash (used in) operating activities (9,309,545) (1,812,965)
------------ -----------
Cash flows from investing activities:
Proceeds from sales of marketable securities 850,000 1,000,000
Capital expenditures (137,942) (1,763,889)
Purchases of marketable securities (855,023)
------------ -----------
Net cash provided by (used in) investing activities 712,058 (1,618,912)
------------ -----------
Cash flows from financing activities:
Proceeds from exercise of options and employee
stock purchases 202,053 153,558
Redemption of senior convertible notes (2,647,603)
------------ -----------
Net cash (used in) provided by financing activities (2,445,550) 153,558
------------ -----------
Net (decrease) in cash and cash equivalents (11,043,037) (3,278,319)
Cash and cash equivalents, beginning of period 11,461,126 21,358,308
------------ -----------
Cash and cash equivalents, end of period $ 418,089 $18,079,989
============ ===========
</TABLE>
The accompanying notes are an integral part of the financial statements
6
<PAGE>
EMISPHERE TECHNOLOGIES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. Interim Financial Statements
The accompanying unaudited condensed financial statements of Emisphere
Technologies, Inc. (the "Company") have been prepared in accordance with
generally accepted accounting principles for interim financial information and
the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly,
they do not include all information and disclosures necessary for a presentation
of the Company's financial position, results of operations, and cash flows in
conformity with generally accepted accounting principles.
In the opinion of management, the accompanying Condensed Statements of
Operations for the three months ended October 31, 1999 and 1998, Condensed
Statements of Cash Flows for the three months ended October 31, 1999 and 1998,
and the Condensed Balance Sheets as of October 31, 1999 and July 31, 1998
reflect all adjustments, consisting only of normal recurring accruals, necessary
for a fair presentation of the Company's financial position, results of
operations, and cash flows for such periods and as of such dates. These
financial statements should be read in conjunction with the financial statements
and notes thereto contained in the Company's Annual Report on Form 10-K for the
fiscal year ended July 31, 1999. The July 31, 1999 Condensed Balance Sheet data
were derived from audited financial statements, but do not include all
disclosures required by generally accepted accounting principles.
Certain prior year amounts have been reclassified to conform to the current year
presentation.
The results of operations for any interim period are not necessarily indicative
of the results for the full year.
The Company expects to incur a substantial increase in liquid oral heparin
clinical development expenses during the remainder of fiscal 2000 as the product
enters into Phase III clinical trials, the most expensive phase of the clinical
development process. As a result, the Company expects to continue to incur
increasing operating losses and will require substantial resources to continue
its liquid oral heparin clinical development program and ongoing research and
development efforts.
In order to assure funding for its future operations, the Company will need to
obtain a marketing partner for its oral heparin product and may be required to
obtain additional financing for Phase III development on its own until a partner
is found. However, no assurances can be given that the Company will be
successful in attracting a marketing partner or in raising additional capital.
In the event that a marketing partner for the oral heparin product is not found,
the Company expects that cash, cash equivalents, and marketable securities on-
hand, combined with and contingent upon either additional financing and/or
delaying clinical trials and curtailment of operations, will be adequate to meet
its liquidity requirements into the second quarter of fiscal 2001.
2. Net Loss Per Share
Net loss per share, basic and diluted, is computed using the weighted average
number of shares of the Company's common stock outstanding during the period.
Had the Company been in a net income position, diluted earnings per share would
have included the shares used in the computation of basic net loss per share, as
well as an additional 4,144,479 and 316,588 shares for the three months ended
October 31, 1999 and 1998, respectively, relating to outstanding options (after
application of the Treasury Stock Method).
7
<PAGE>
3. Comprehensive Income
Comprehensive loss of the Company includes net loss adjusted for the change in
net unrealized gain or loss on marketable securities. The net effect of income
taxes on comprehensive loss is immaterial. For the three months ended October
31, 1999 and 1998, the components of comprehensive loss were:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Net loss $ (9,882,720) $ (2,980,346)
Change in net unrealized (loss) gain on marketable
securities
(6,415) 102,849
------------ ------------
Total comprehensive loss $ (9,889,135) $ (2,877,497)
============ ============
</TABLE>
4. Senior Convertible Notes Payable
The remaining balance of approximately $2.6 million, along with interest
thereon, was repaid on September 15, 1999.
5. Ebbisham Ltd.
Ebbisham Ltd., the Company's former oral heparin joint venture with Elan
Corporation plc, was terminated in the fourth quarter of fiscal 1999.
Thereafter, the Company assumed sole responsibility for clinical development and
funding of oral heparin. Previously, the Company accounted for its investment in
Ebbisham in accordance with the equity method of accounting.
6. Subsequent Event and Pro Forma Balance Sheet
On November 2, 1999, the Company issued 2.3 million shares of common stock in a
public offering. The net proceeds were approximately $23.5 million, net of
estimated expenses. The proceeds from the offering will be used to fund a
portion of the Phase III clinical development of the Company's oral heparin
formulation, research and development and general corporate purposes.
The pro forma column of the balance sheet has been prepared to show the effect
that this transaction would have had on the balance sheet as if it had occurred
on at October 31, 1999.
8
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
Emisphere Technologies, Inc. is a biopharmaceutical company specializing in the
oral delivery of therapeutic macromolecules and other compounds that are not
currently deliverable by oral means. Since its inception in 1986, the Company
has devoted substantially all of its efforts and resources to research and
development conducted on its own behalf and through collaborations with
corporate partners and academic research institutions. The Company has no
product sales to date. The major sources of the Company's working capital have
been proceeds from various public and private equity and debt financings,
reimbursement of expenses and other payments from corporate partners, and income
earned on the investment of available funds.
Results of Operations
Contract research revenues were $625,000 for the first quarter of fiscal 2000,
compared to $3.6 million in the same period of fiscal 1999, a decrease of
approximately 83%. Contract research revenues in fiscal 2000 were from the
Novartis Pharma AG research collaboration and were consistent with the first
quarter of fiscal 1999. Contract research revenues in fiscal 1999 also included
$2.7 million from the Company's former heparin joint venture and from the Eli
Lilly & Co. collaboration. The research and development funding portion of the
ongoing Lilly collaboration was completed in the third quarter of fiscal 1999.
The heparin joint venture was discontinued in the fourth quarter of fiscal 1999.
Revenue for the first quarters of fiscal 2000 and 1999 were comprised of
reimbursed research and development expenses. Costs of contract research revenue
approximate such revenue and are included in research and development expenses.
Research and development expenses increased to approximately $8.1 million in the
first quarter of fiscal 2000 from approximately $4.0 million in the
corresponding period of fiscal 1999, an increase of approximately 103%. The
increase was primarily related to liquid oral heparin clinical development and
continuing Novartis development efforts. The largest component of the increase
in research and development expenses for the first quarter of fiscal 2000
compared to the first quarter of fiscal 1999 was for clinical research services
related to the upcoming liquid oral heparin Phase III clinical trial. In
addition, the Company increased its scientific and development personnel in the
areas of parallel synthesis, solid dosage formulation, quality control and
regulatory affairs in order to accommodate increased efforts related to oral
heparin development and the Novartis collaboration.
General and administrative expenses decreased slightly to approximately $1.3
million in the first quarter of fiscal 2000 from approximately $1.4 million in
the first quarter of fiscal 1999, a decrease of approximately 7%. The decline
was due to lower sales and real estate taxes. For the remainder of the fiscal
year, general and administrative expenses are expected to increase over prior
fiscal year levels in order to support increasing levels of research and
development activities.
The loss in Ebbisham Ltd. (the Company's former joint venture with Elan
Corporation plc) decreased by $1.2 million in the first quarter of fiscal 2000
from the same quarter of fiscal 1999 due to the discontinuation of the joint
venture in the fourth quarter of fiscal 1999.
As a result of the above, the Company's operating loss for the first quarter of
fiscal 2000 increased to $9.4 million from $3.2 million in the first quarter of
fiscal 1999.
Other income and expense decreased to approximately $505,000 of net expense from
$261,000 of net income. The change is primarily the result of an increase in
interest expense and decreased investment income. The increase in interest
expense in the first quarter of fiscal 2000 over the same period in fiscal 1999
is primarily attributable to non-cash interest expense accrued on the $20.0
million (principal balance) note payable, which was recorded in conjunction with
the fiscal 1999 fourth quarter acquisition by the Company's of its partner's
9
<PAGE>
interest in the former heparin joint venture. Interest was earned on lower cash
and investment balances in the first fiscal quarter of 2000 compared to same
period in fiscal 1999.
Based on the above, the Company sustained a net loss for the first quarter of
fiscal 2000 of $9.9 million, or $0.81 per share, compared to a net loss of $3.0
million, or $0.27 per share in the first quarter of fiscal 1999.
Liquidity and Capital Resources
As of October 31, 1999, the Company had working capital of $5.2 million. Total
cash, cash equivalents and marketable securities were $5.9 million, a decrease
of $11.9 million compared to July 31, 1999. On November 2, 1999, the Company
issued 2.3 million shares of common stock for net proceeds of approximately
$23.5 million.
Net cash used in operations was $9.3 million in the first quarter of fiscal 2000
as compared to $1.8 million in the first quarter of fiscal 1999. The increase in
cash used in operations was primarily due to the increased rate of spending on
liquid oral heparin clinical development.
Capital expenditures were approximately $140,000 in the first quarter of fiscal
2000 compared to $1.8 million for the first quarter of fiscal 1999. The decrease
in capital expenditures is primarily due to the fiscal 1999 build-out of the
Company's leased laboratory and office space, which is now complete.
Net cash used in financing activities was approximately $2.4 million in the
first quarter of fiscal 2000 compared to $154,000 of net cash generated in the
first quarter of fiscal 1999. The change was due primarily to the repayment of
approximately $2.6 million of the remaining balance of the senior convertible
note payable during the first quarter of fiscal 2000.
As part of the termination of the Ebbisham joint venture in July 1999, Elan
committed to provide the Company with up to $15.0 million in loans, subject to
various conditions, including the Company attaining certain liquid oral heparin
Phase III milestones by October 31, 1999. The Company did not meet these
milestones and the commitment expired.
During the first quarter of fiscal 2000, Novartis initiated and completed a
Phase I clinical study of a capsule form of one of their protein macromolecule
compounds. This testing incorporated the Company's drug delivery technology.
Novartis may elect to enter into a pre-negotiated licensing agreement with the
Company at any time until March 2000. If this election is made, Novartis will be
required to pay the Company a predetermined milestone and purchase $5.0 million
of common stock at a previously negotiated market-based per share price, subject
to the Company's approval. The Novartis research collaboration expired in
December 1999, at which time its quarterly research and development funding
obligations ended. The Company is in discussions with Novartis to extend into
calendar 2000 their research and development funding.
The Company expects to incur a substantial increase in liquid oral heparin
clinical development expenses in fiscal 2000 as the product enters into Phase
III clinical trials, the most expensive phase of the clinical development
process. As a result, the Company expects to continue to incur increasing
operating losses and will require substantial resources to continue its liquid
oral heparin clinical development program and ongoing research and development
efforts.
In order to assure funding for its future operations, the Company will need to
obtain a marketing partner for its oral heparin product and may be required to
obtain additional financing for Phase III development on its own until a partner
is found. However, no assurances can be given that the Company will be
successful in attracting a marketing partner or in raising additional capital.
In the event that a marketing partner for the oral heparin product is not found,
the Company expects that cash, cash equivalents, and marketable securities on-
hand, combined with and contingent upon either additional financing and/or
delaying clinical trials and
10
<PAGE>
curtailment of operations, will be adequate to meet its liquidity requirements
into the second quarter of fiscal 2001.
Year 2000 Compliance
The "Year 2000" problem relates to many currently installed computers, software,
and other equipment that are not capable of distinguishing 21st century dates
from 20th century dates. As a result, some systems used by many companies, in a
very wide variety of applications, will experience operating difficulties unless
they are modified, upgraded, or replaced to adequately process information
involving, related to or dependent upon the century change. If a business system
used by the Company or a third party dealing with the Company fails because of
the inability of the business system to properly read a 21st century date, the
results could have a material adverse effect on the Company.
The Company recognizes the need to ensure its operations will not be adversely
impacted by Year 2000 business systems failures and has established a team to
address Year 2000 risk. The team has reviewed the Company's internal
infrastructure and believes that it has identified substantially all of the
major business systems used in connection with its internal operations. The
Company has completed the process of identifying and correcting the major
business systems that needed to be modified, upgraded, or replaced. Costs
incurred to date to correct Year 2000 problems have not been material to our
results of operations.
The Company also recognizes the risk that suppliers of products, services, and
collaborators with whom the Company transacts business on a worldwide basis may
not comply with Year 2000 requirements. The Company has initiated formal
communications with significant suppliers and collaborators to determine the
extent to which the Company is vulnerable if these third parties fail to
remediate their own Year 2000 issues. The review is ongoing and the Company is
unable to determine, at this time, the probability that any material supplier or
collaborator will not be able to correct any Year 2000 problem in a timely
manner. In the event any such third parties cannot provide the Company with
products, services, or continue the collaborations with the Company, the
Company's results of operations could be materially adversely affected.
Based on the above, the Company does not believe it needs to develop a
comprehensive contingency plan with respect to the Year 2000 problem. The
Company will continue to monitor its own business systems and, to the extent
possible, evaluate the business systems of its third party suppliers and
collaborators to ensure progress on this critical matter. However, if the
Company identifies significant risk related to the Year 2000 compliance, or
progress deviates from anticipated timelines, the Company will develop
contingency plans as deemed necessary at that time.
Impact of the Future Adoption of Recently Issued Accounting Standards
Management believes that future adoption of recently issued accounting standards
will not have a material impact on the Company's financial statements.
11
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule
(b) Reports on Form 8-K.
During the period covered by this report, the registrant filed a Current Report
on Form 8-K dated October 28, 1999 and Form 8-K/A dated September 14, 1999.
On October 28, 1999 Emisphere Technologies, Inc. entered into an underwriting
Agreement with Hambrecht & Quist LLC with respect to the sale of 2,300,000
shares of common stock of the Company.
On September 14, 1999 the Company amended Item 7 of Form 8-K filed July 16, 1999
by including historical and pro forma financial statements of Ebbisham Limited.
12
<PAGE>
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Emisphere Technologies, Inc.
December 15, 1999
/S/ Charles H. Abdalian, Jr.
----------------------------
Charles H. Abdalian, Jr.
Chief Financial Officer
(Principal Financial Officer)
/S/ Joseph D. Poveromo
----------------------
Joseph D. Poveromo
Controller and Chief Accounting Officer
(Principal Accounting Officer)
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from the
Financial Statements of Emisphere Technologies, Inc. at October 31, 1999 and is
qualified in its entirety by reference to such Financial Statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-2000
<PERIOD-START> AUG-01-1999
<PERIOD-END> OCT-31-1999
<CASH> 418,089
<SECURITIES> 5,487,005
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,682,908
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 26,180,619
<CURRENT-LIABILITIES> 1,492,663
<BONDS> 0
0
0
<COMMON> 122,065
<OTHER-SE> 1,478,229
<TOTAL-LIABILITY-AND-EQUITY> 26,180,619
<SALES> 0
<TOTAL-REVENUES> 625,000
<CGS> 0
<TOTAL-COSTS> 10,002,975
<OTHER-EXPENSES> (274,158)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 778,903
<INCOME-PRETAX> (9,882,720)
<INCOME-TAX> 0
<INCOME-CONTINUING> (9,882,720)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (9,882,720)
<EPS-BASIC> (0.81)
<EPS-DILUTED> (0.81)
</TABLE>
